Digital Scotlan d - University of Edinburgh · 2010-06-30 · Contents ExecutiveSummary 4 1...

DigitalScotland

an interim report for consultation

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Towhom itmay concern:

Digital Scotland:an interim report for consultationIn 2009, the UK Government published its Digital Britain report, and set out an ambition,“to secure theUK’s position as one of theworld’s leading digital knowledge economies.”

Building on this, the Royal Society of Edinburgh set up a working group to take a broaderview of the ways in which technological change could be stimulated and exploited foreconomic and social benefit, and to explore these within the particular economic, socialand geographic context of Scotland. Its intention is to stimulate debate, to identifypriorities, to suggest the roles that governmental and nongovernmental actors might playin exploiting the digital world, and to recommend some strategic priorities for Scotland.

The first draft of a report is enclosed, which concentrates on a number of vital issuesthat need urgently to be addressed in Scotland and the rest of the UK to ensure thatthe coverage, speed and use of our digital infrastructure will allow us to grasp theopportunties of the new digital world. We must ensure that our targets match thoseof at least most of our competitors — to do less is to be left behind.

Our report concentrates on four key areas — users, infrastructure, content andbenchmarks — and develops four major recommendations:

> to remove fiscal and regulatory obstacles to universal connectivity,

> to enable competition and cooperation,

> to stimulate development and uptake, and

> to ensure universal access and digital inclusion

This is work in progress. We intend that our final report will evolve considerably,particularly in developing the key challenges and in elaborating recommendationsthat will address them. We can best do this if we receive comments and suggestionsfrom a wide range of stakeholders. We therefore ask you to consider this draft andsuggest ways in which it should be amended by identifing opportunities and obstacles,and suggesting ways that they might be addressed. This will produce a more robustlong-term strategy.

Michael Fourman, FRSEChair, RSEDigital Scotlandworking group

Please address comments to:

SusanBishop, Consultations Officer, Royal Society of Edinburgh, 22 George Street, Edinburgh, EH2 2PQby 3rd September 2010.

You can also email [email protected] or comment online http://digital-scotland.blogspot.com

ContentsExecutive Summary 4

1 A changingworld 7

2 The need for action 7

3 Users and benefits 73.1 Continuing change 83.2 Economy 93.3 Health 103.4 Society 113.5 Digital inclusion 123.6 Conclusions 14

4 Infrastructure 154.1 The pace of change 154.2 Technologies 174.3 Implementation 194.4 Conclusions 21

5 Content and access 225.1 Health 225.2 Education 225.3 Government 235.4 Broadcasting 235.5 Access 23

6 Benchmarks 246.1 Sweden 246.2 Finland 266.3 New Zealand 266.4 USA 276.5 Rutland Telecom 286.6 Tegola 286.7 Commentary 28

7 Recommendations 327.1 Goals 347.2 Recommendations 34

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The Royal Society of EdinburghDigital Scotland: an interim report for consultation

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Executive SummaryDigital societyDigital technologies are changing the ways we communicate and interact, socially and commercially,and thus changing the fabric of society. The digital society extends advantages — new efficiencies andnew goods – spread across the economy and society.

Scotland needs a Digital Strategy to keep pace with progress in a rapidly changing world. This willenable local enterprises to participate in the global digital economy, include local communitiesin the global digital society, and allow Scotland to exploit new opportunities — afforded by currentand future technologies — for innovation in government, manufacture, culture, education, healthand commerce.

The competitive position of Scotlandʼs information infrastructure will determine our place in theglobal digital society. Just as transport infrastructure was a key to widening domestic markets inthe 19th Century, so our digital infrastructure will determine our participation in global marketsin the 21st Century. It will be as important as our physical cultural infrastructure in establishingand communicating our cultural identity. This infrastructure is the connective tissue of the digitalsociety. It supports an information eco-system that is changing the way we live.

Scotland rightly has national strategies for transport and culture. A Digital Scotland strategy shouldaddress Scotlandʼs inclusion in the digital society.

Continuing changeScotland took an early lead in ensuring universal access to first generation broadband, becauseit was recognised that the benefits of broadband adoption accrue not just to individual consumers,but to other broadband users and society as a whole. This may suggest that internet access inScotland is a solved issue.

It is not: just as computer performance has increased exponentially for over 30 years (Mooreʼs Law),so median broadband speeds are expected to follow Neilsenʼs Law: they will double every 20 months,increasing 64-fold over the next decade. Scotland should ensure universal access to an evolvingdigital infrastructure that keeps pace with these global developments.

Whya strategy is neededInitial development and wide-scale roll-out of digital communications technologies was largely drivenby consumer markets in entertainment and gaming. Other uses of the internet, including surfing,email, banking and shopping, now dominate.

Consumer demand will not lead to optimal provision because the benefits of broadband adoptionare not all returned to the broadband customer, nor to the supplier. These benefits are widelydistributed, across society. In particular, social benefits — for education, health, commerce, socialinclusion, and equality of opportunity — are external to the broadband supplier-consumer relationship.Economists call them “positive externalities”.

Social benefits provide no direct incentive for telecoms companies with limited capital budgets toextend access, nor do they feed through to proportionate increases in consumer demand. Providerswill always deploy digital infrastructure selectively, prioritising affluent, densely-populated regions,where lower costs generate higher revenues. Consumer-driven provision therefore leaves those whoalready suffer social exclusion without access .

Where the market fails to provide, for reasons of distance or deprivation, intervention will be required toensure access to the digital society. Universal access would maximise the social benefits: it would provideequality of opportunity, equalise the distribution of economic activity, and increase social cohesion.

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Connected opennetworksThe internet is a network of networks. It does not rely on central control or coordinating facilities.Any network that adheres to the internet protocol can connect to the global network by negotiating a“backhaul” connection to one or more already connected networks1. Some networks merely carrytraffic from one network to another, facilitating global connectivity; some are the internal networks oforganisations and corporations; others exist to connect individual subscribers to the global internet.Local access networks connect to each other, and to wide area networks that provide backhaul, in adigital symbiosis.

In a country such as Scotland, with diverse human and physical geography, the local access networksconnecting local communities will use a variety of electrical, optical and wireless technologies.Communities can aggregate demand to achieve communal benefits, so some communities will bemotivated to develop their own local access networks, even where individual consumer demand doesnot justify market investment.

There are opportunities for local innovation and investment to develop and maintain novelarchitectures for local access networks. These require access to wide-area networks that providehigh-speed backhaul connections. Although existing providers may view community networksas unwelcome competition, open access to backhaul would stimulate competition, innovation, andbroadband penetration.

Placing a backhaul connection within reach of every community in Scotland, and ensuring an openmarket in backhaul provision, would extend the market-led roll-out of mobile and fixed broadband,and enable local innovation and entrepreneurship to develop local access networks where nationalproviders choose not to invest.

Digital inclusionUntil every home is connected, public provision of internet access in supportive environments,such as libraries, waiting rooms, and community centres, is required to ensure universal access.Once access is achieved, digital training and support can be naturally integrated into existingeducational and social support systems.

Recommendations1 Remove fiscal, regulatory and competitive obstacles to the establishment of interconnected

fiber networks that provide backhaul within reach of every community.

2 Enable competition, in the wholesale and retail provision of connectivity through the backboneto the global internet, to stimulate market provision of mobile and fixed access to everycommunity.

3 Stimulate development and uptake of digital technologies through open-access publicationof public data and public procurement of standards-based, open source systems.

4 Provide public access, skills training, and support networks to ensure universal digital inclusion.

We have not undertaken rigorous impact analyses for our proposals. However, the first three arecost-neutral interventions that would significantly change market pressures, by stimulating backboneprovision and reducing the marginal costs of local access. This would increase private sectorinvestment in both core and local access networks and reduce the costs of the public sectorinterventions required in any persistent areas of market failure.

1 “Backhaul” is the connection from the local network to the rest of the world.

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ScotlandCensus 2001Census output areas with population density greater than 50 inhabitants per km2 shown in red;elsewhere the population is sparser.

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1 A changingworldThe last two decades have seen a global socio-economic transformation of historical proportions.New digital technologies have wrought an immense increase in global economic interaction, andbeen vital agents in the shift of the global economy from one rooted in land, labour and capitaltowards one shaped by information and knowledge. New markets have disrupted pre-existing forms,and the potential for public benefit in health, education, leisure and many other areas of humanacitivity is being explored and realised. Young people have led in creating new modes of social andpolitical intercourse unanticipated by those who developed and introduced the underlying technologies.

This digital revolution has only just begun. The pace of change will accelerate rather than falter.Information technology is the connective tissue of the modern society. Hardware and softwaresupport the metabolism of a complex, evolving socio-technological eco-system that is an integral partof the way we live, and that will increasingly underpin our futures. The accelerating pace of changepresents major challenges.

How can Scotland keep pace with global developments? How does government identify and create aframework of regulation, incentive and investment that will enable the development of a sustainablebasic infrastructure and private sector ecosystem that will build creatively upon it? Can we create theconditions for disruptive innovation? Can we break down the damaging digital divide and use thesetechnologies to strengthen all our communities and extend the reach of education and healthcare?

2 The need for actionThese issues are central to Scotland’s future. Other countries are already implementing changesthat will propel them into the future. Scotland needs to develop both the profound thinking required todevelop a strategy, and the means, in difficult economic circumstances, to take some of the decisivesteps that will be needed to ensure our progress.

Many excellent initiatives are under way in Scotland, particularly in health and education. However,without decisive action, their reach will be limited by lack of infrastructure where it is most needed.Only a decisive strategic frame can produce the infrastructure that will enable digital inclusion —equality of opportunity in the digital society.

Failure to rise to this challenge will have the consequence of serious social, cultural and economicimpoverishment compared to many other countries. Scotland excels in the whole realm ofinformatics, including information technology. However, the many issues to be addressed arecomplex, and the pace of innovation and change is rapid. A race is being run. Scotland will need todraw expertise together from sometimes competing interests, who must now collaborate tocompete on a wider stage.

3 Users and benefitsGood telecommunications access has evolved from a luxury into a necessity. The internet is evolvingfrom an information delivery technology to become a primary vehicle for social and economicinteraction.

This already provides new opportunities. For example, in healthcare,

Patients in Caithness General Hospital receiving kidney dialysis can now have reviews carried outremotely with their consultant at Raigmore Hospital, Inverness, cutting out a 200 mile round trip.A similar teledialysis link has been used in the far north of Norway since 2000, to connect a mainrenal unit with three outlying clinics.2

2 http://news.bbc.co.uk/1/hi/scotland/highlands_and_islands/8634562.stm

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In education, the Pathfinder project has brought broadband to every school in Scotland — but in thisexample the impact is currently limited by lack of connections to children’s homes:

Mallaig High School makes extensive use of GLOW, Scotland’s national intranet for education.Pupils from the Small Isles board weekly. In the winter the sea crossing is often impossible,and weeks of school time are lost due to bad weather. The bandwidth currently available onthe Small Isles does not support GLOW. A high-speed internet connection would allowstorm-bound pupils to access GLOW from their homes, and to interact with their classesvia telepresence.

A digital society, where many aspects of life are conducted online, supports more efficient businessesand can deliver better healthcare, education and social services at reduced cost. Those unable toaccess these services suffer exclusion from the benefits of the digital society. This can create newinequalities and exacerbate existing social and economic divides.

The internet is an efficient transport network for digital goods, already substituting for physicaldelivery of mail, music, videos, newspapers, books, magazines and photographs. It is an efficientcommunications network, substituting for the fax and telephone, and also providing video calls andconferencing. It makes reference libraries available, anytime, and almost anywhere. Together withits associated technologies for collecting, storing, analysing, processing and visualising data andinformation, it brings a host of new goods and labour-saving devices into the hands of every man,woman, and child.

Just as an electricity supply is required to benefit from many 20th Century innovations, a broadbandconnection gives access to a range of new digital goods and services that we will come to see asessential. In the 21st Century, information networks will become as critical to social inclusion andeconomic prosperity as transport and electricity networks have been in the 20th — the telephone,like the telegraph before it, will become a footnote in the history of telecommunication.

3.1 Continuing changeWe must prepare for a period of change. Predictable advances in communications technology willlead to further disruptive changes in social and commercial services. Technological advances will beexploited, globally, to replace broadcast media by on-demand access and to introduce new levels ofremote telepresence and interaction. Applications will increasingly depend on symmetricalconnections that feature high data rates with low latency, both upstream and downstream.

According to the EU Directive on universal service obligations and users’ rights relating to electroniccommunications networks and services, provision of access includes sending and receiving data atrates sufficient to permit functional internet access, taking into account prevailing technologies usedby the majority of subscribers and technological feasibility. We believe that next-generation internetaccess will soon fall within this definition.

As the usage of broadband interaction increases, prevailing technologies will follow Neilsen’s Law.A dynamic definition of universal service is implied. The minimum connection rate for universalaccess must track advances in the information society to ensure continuing digital inclusion.3

The most important advances will probably be those we cannot predict. We can however alreadyforesee that these technological advances will bring new ways of life. We briefly consider someof the ways this will change society.

3 See the Infrastructure section for details.

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3.2 EconomyBusinesses in connected communities can be more efficient and can access global markets, makingtheir local economies more productive. Digital infrastructure can improve quality of life, helping toattract residents and sustain local communities. Conversely, employers and young people will moveaway from communities that cannot offer digital inclusion.

All industries are being fundamentally changed by new information technologies. Consider, forexample the International Standard Industrial Classification4:

Many intrinsically require a community with mobile as well as fixed internet access to derivemaximal benefit.

In addition, the IT sector itself brings productivity. While only 6% of the UK population works in theIT-related sector, these jobs produce 10% of the GDP (the remaining 94% of workplaces producesthe rest, 90%). This means that each job in the IT sector produces, on average, 74% more value thanother “traditional” sectors. Increasing the use of digital technologies will have the added benefit ofstimulating growth in this sector.

The importance of information technology in productivity was pointed out both in the old “LisbonStrategy”5 and in the new EU 2020 strategy6. Both strategies recognise “innovation as the motorfor economic change".

Advances in communications infrastructure reduce transaction costs and provide access to globalmarkets. These come hand-in-hand with advances in data collection and analysis. Improved decisionmaking reduces the reaction times of businesses responding to threats and opportunities. Modellingand simulation are used to optimise designs and reduce risks.

4 http://unstats.un.org/unsd/cr/registry/regcst.asp?Cl=2

5 http://en.wikipedia.org/wiki/Lisbon_Strategy

6 http://ec.europa.eu/eu2020/pdf/COMPLET%20EN%20BARROSO%20%20%20007%20-%20Europe%202020%20-%20EN%20version.pdf

> Agriculture, hunting, and forestry;

> Fishing;

> Mining and quarrying;

> Manufacturing;

> Electricity, gas and water supply;

> Construction;

> Wholesale and retail trade; repairs;

> Hotels and restaurants;

> Transport, storage and communications;

> Financial intermediaries.

> Real estate, renting and business activities;

> Public administration and defence;social security;

> Education;

> Health and social work;

> Other community, social and personalservice activities;

> Private households with employed persons;

> Extra-territorial organisations and bodies.

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Today, tools for analysis, modelling and simulation are normally managed in-house, by largecompanies, and are inaccessible to most small businesses. “Cloud computing” will make themaccessible as services accessed over the internet.7 This will have a strong economic impact in makingthese new technologies available to SMEs, thanks to the lower capital expenditure and reducedin-house expertise required, and the increase in flexibility.

Some sectors deal directly in information. For them there are obvious benefits. Information goods —books, music, videos, newspapers, magazines, games and recipes — can be duplicated and deliveredat negligible cost, by substituting the production and transport of physical media with the cheapertransport of bits.

All sectors process transactions. The internet removes the need for physical co-location. Many salesof goods and services, as well as internal transactions, now take place over the internet. This reducescosts. Savings are offered for internet purchases, but the dynamics of online competition can alsoincrease returns to producers.8 Both consumers and producers benefit from a more efficienteconomy.

Telecommuting also enables more people to contribute to the workforce. Parents, staying home toraise young children, can have the opportunity to work flexible hours from home. The ability to workfrom home, connected by broadband networks, will also enable the elderly to remain productive laterin life. Tele-presence and real-time video links allow effective remote interaction with colleagues,experts and customers.

Digital connectivity lets local businesses access global markets, and operate more efficiently.It stimulates activity by providing more opportunities for both work and leisure.

3.3 HealthThe efficiency and quality of delivery of health services can be enhanced by the use of digitaltechnology, giving rural patients the access to expertise currently only available to those living inmajor metropolitan areas. Universal deployment of high-speed broadband will enable greater useof telemedicine, improving health care outcomes and lowering overall health care costs.

Telecare, remote monitoring and related assistive technologies can enable older and disabled peopleto remain in their own homes — rather than in hospitals or residential care — saving money byreducing demand for residential care space. Video-chat can allow those housebound to maintainsocial contact.

Telemedicine is a useful and effective tool in the delivery of care. Improved access to interdisciplinaryteams enhances coordination of care, decreases isolation for both patients and their families, andprovides timely interventions, all while avoiding the complexities associated with transporting peopleto multiple providers.

These effects will be of particular relevance in countries with areas of relatively sparse population.A good example is the use of a long-distance wireless network in the southern Indian state of TamilNadu to allow hospital-based eye specialists to interview and examine patients in five remote clinicsvia high-quality video conferencing.9

7 http://ec.europa.eu/information_society/eeurope/i2010/docs/benchmarking/benchmarking_digital_europe_2011-2015.pdf

8 http://ideas.repec.org/p/iuk/wpaper/2006-11.html

9 http://tier.cs.berkeley.edu/wiki/Aravind

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3.4 Society

“Broadband is particularly important because it delivers benefits rightacross every sector of society. That’s why broadband needs to reachall people, in all nations.”10 HamadounTouré, Secretary-General ITU,May 2010

The electronic age has already led to profound changes in society, both local and global. Inclusionin the digital society — digital inclusion — has become as important as literacy in ensuring socialinclusion and equality of opportunity, from which those outwith are excluded.

Digital technology offers many opportunities for improvingaccess to public services, potentially improving bothquality and efficiency. It can boost the quality of life in allcommunities by providing access to a wider range ofopportunity, interaction and experience. With greater accesscomes better ability to choose services, access educationand market information (as either consumers or producers)and membership of various online communities fromprofessional networks, advisory services to special interestor leisure groups.

Web 2.0 and other technologies (for example 3G mobilecommunications) mean that with improved connectivity, it isnot only formal organisations that increase their spread ofcommunications, but also that informal networking andsharing possibilities increase, often spontaneously, in waysthat could not be predicted. These possibilities have, forexample, transformed the relationships between producersand consumers of arts and culture and in business services.

The Inclusion Through Innovation report 11 explores how information and communicationtechnologies (ICT) can be used to make mainstream public services – including education andtraining, health, employment and benefits and housing – more effective, efficient, and accessiblefor socially excluded groups. It sets out numerous examples of innovative uses of technology toaddress exclusion.

Social cohesion depends in large measure on equalisation of access to public services and of thedistribution of economic activity. Digital connectivity affords wider access to public services suchas education and health, together with efficiencies that reduce costs of delivery.

Civil society also plays an important role in social cohesion and good governance. Civil organisationsare especially strong in parts of Scotland and have been transformed through ICT. They use internetto broadcast their messages, mobilise campaigns, communicate with members, organise eventsand provide information. A thriving civil society is essential for social, political and economicdevelopment in Scotland and these loose networks especially benefit from digital communicationin rural areas.

Society benefits from a more efficient workforce. Broadband is reducing travel, by enabling tele-work,as well as tele-health, tele-education and tele-play. While workers receive the most obvious benefit(in the form of reduced travel time and access to more employment opportunities), employers alsoreport substantial saving and productivity gains.12 Society also benefits from reduced congestion,pollution and energy consumption.

However, without intervention, the market will not provide the infrastructure required to extend thebenefits of a digital society to those who need them most. The factors — of distance and deprivation— that favour social exclusion, lead also to digital exclusion, to compound their disadvantage.

10 http://www.egovmonitor.com/node/36327

11 http://www.cabinetoffice.gov.uk/media/cabinetoffice/social_exclusion_task_force/assets/publications_1997_to_2006/inclusion_final_report.pdf

12 http://siteresources.worldbank.org/EXTIC4D/Resources/IC4D_Broadband_35_50.pdf

Advantagesof inclusion

> Access to services.

> Access to social capital.

> Time-distance compression.

> Access to broadcasting.

> Improved life opportunities.

> Cultural inclusion.

> Educational opportunities.

> Remote working.

> Telepresence.

> Sustainable communities.

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3.5 Digital inclusionDigital inclusion — the inclusion of every individual within the digital society — requires that eachperson has technical means of access, skills that enable autonomy of use, and appropriate socialsupport networks. Digital inclusion should be universal, because it stimulates social inclusionand extends equality of opportunity.

Uptake of digital communications varies widely across the country. People remain unconnected for avariety of reasons of cost, availability and choice. Somehaemeat and canna eat, and somewad eat thatwant it. Those already most disadvantaged are least likely to be connected.

The Ofcom Communications report for 2009 identified that only 39% of households in Glasgow wereconnected to broadband, which compares with 73% of households in Aberdeen and 72% in Edinburgh.Scotland as a whole had a broadband take up rate of 60% — which is 8% less than the UK average.

Ensuring universal access is challenging, savings can be made by leaving the most distant and mostdeprived unconnected. Delivering broadband to these most difficult cases has a higher than averagemarginal cost. However, the marginal benefits — the positive externalities — will also be greaterthan average.13

Those who would naturally be left out by partial provision are those who are most inaccessible:the geographically distant and economically deprived. They already account for a disproportionateshare of the costs of social provision. Because of their inaccessibility they typically receive lower thanaverage services, provided at a greater than average cost. So, delivering improved services to thissub-population — better access to healthcare and education, and improved social inclusion —at reduced cost offers correspondingly high potential savings.

Until we achieve universal access, we cannot achieve the full benefits of digitisation. Until that time,legacy systems must be maintained to cater for the unconnected minority, at disproportionate cost.Until that time our education systems cannot presume universal digital access, nor aspire touniversal digital literacy.

It is clear, however, that access is only a first step. A number of digital divides remain importantand without policies to address them, universal access will not lead to universal digital inclusion.

These digital divides include:

> generational (younger people are more tuned in than older people)

> technological (communities with slower connectivity are left further and further behind)

> wealth (those who can afford neither access nor substitutes such as travel, are excluded)

> gender (men generally have better access to digital technology — although this maybe changing)

> educational (those with higher levels of education are more likely to benefit)

Many of these digital divisions exacerbate existing inequalities and disadvantages. However,experience shows fast learning of digital technology. ‘Catching up’ can be relatively swift, and canhelp address the other disadvantages. It is not likely to happen without targeted interventions.

13 http://www.ofcom.org.uk/research/cm/cmrnr09/scotland/cmrnrscot.pdf

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Whole communities risk being “left behind” in the transition to a digital society.14 Indeed, we mightextend the notion of “social exclusion” to include “digital exclusion” since more and moreopportunities and services depend upon online communications.

Scotland has some of the most deprived neighbourhoodsin Europe. Ensuring access for members of thesecommunities must be an essential part of urban andsocial regeneration strategies.15

Remote and peripheral rural regions comprise a large partof the territory of Scotland and pose particular problemsin terms of communications infrastructures. Digitalcommunication can help to improve communications withinscattered populations and between them and the outsideworld. This has advantages for logistics and tourism.Scotland's rural populations are demographically older, andpoorer than those in urban Scotland. The costs of transportand communications are higher in these areas, meaningthat even less poor people are worse off.

Many small- and micro-businesses, especially those inrural areas, do not have sufficient funds for large-scaleinfrastructural investments (for example in telecommunications) and are further disadvantagedthrough lack of easy access to markets and supplies, logistical facilities etc., which makes them lesscompetitive. They are able to gain good connectivity only by pooling resources and this can bestimulated by an outside facilitator.16

Arts and cultural organisations, as well as creative industries more generally, represent a significantpotential area of economic growth as well as enhancing the quality of life. Many small arts providersand festivals could use internet access to reach new audiences.17

Minority language communities, such as Gaelic, benefit significantly from being able to use digitaltechnology and Web 2.0 applications to provide access to language resources and communicatewith users around the world. Digital communications can be an important way of promoting andpreserving regional identities more generally through archiving of music, story-telling, poetry andlocal history.

Ethnic and migrant groups are likely to have less income. They would also potentially benefit fromincreased connectivity in order to find new work opportunities and maintain links with compatriots.

Women have traditionally had less access to technology, but with more accessible applications, theyare able to take advantage of digital communications. Women represent a hidden resource in ruralareas if they have access to wider opportunities through business coaching and other support.18

14Many of these are being explored through projects at dot.rural, the rural digital economy hub at the University of Aberdeen.

15Bailey, N., J. Flint, et al. (2003). Measuring Deprivation in Scotland: developing a long term strategy. Final Report. Edinburgh,Scottish Executive Central Statistics Unit.

16Both Scottish Enterprise and Highlands and Islands Enterprise have been active in this respect

17Creative Scotland has invested in schemes to promote the creative industries using the transformational impactof new digital technologies.

18 A project in remote coaching of women in new businesses is being conducted at the Robert Gordon University and there are NGOswho facilitate women in rural businesses such as WiRE (Women in Rural Enterprise).

Communities for inclusion

> Deprived urban neighbourhoods.

> Remote and peripheral regions.

> Small- and micro-businesses.

> Arts and cultural organisations.

> Minority language communities.

> Ethnic and migrant groups.

> Women.

> Aged and infirm.

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3.6 ConclusionsA Digital Scotland strategy should give everyone an opportunity to benefit from the digital age.Citizens increasingly require telecommunications access of a high standard for work, educationand leisure. Individuals can only be members of the ubiquitous information society in so faras their telecommunications infrastructure allows them to participate.

Widespread access to broadband is becoming a key economic driver, and universal access a centralfactor in ensuring equality of opportunity. Universal access will enhance the competitiveness ofScottish industry, increase social cohesion, and be an important component of any national balancedgrowth strategy.

Infrastructure development will stimulate demand from remote work, tourism and rural business,healthcare and education, among others. The market alone, however, will not provide universal digitalinclusion, since many of the social benefits have no influence on the purchasing decisions of existingbusinesses or individual consumers.

A Digital Scotland strategy should incorporate the development and use of an integrated informationinfrastructure into our long-term strategic master plans, alongside established strategic issues suchas culture, transport and energy. In particular, to underpin digital inclusion, national, regional andcommunity planning should ensure that the infrastructure — technical means of use — required forinformation society services is accessible to all.

Digital literacy has already become a key skill for people in many different aspects of their livesand equipping people with computer skills has arguably become just as important as reading,writing and arithmetic.

Schools and colleges are increasingly utilising IT across a range of subjects, exposure to theseuses will develop digital skills in those in education. To develop social support networks and skillsfor those not in education, we should take advantage of existing infrastructure and shared facilities.For example, policies aimed at rural areas could build on existing resources such as schools,post offices, local shops, post vans, buses, boats and trains.

Existing infrastructures such as community centres, churches, youth clubs, pensioners’ clubs,sports facilities, nurseries, mums and toddlers clubs etc., could be used to access otherwisedisadvantaged communities. These existing infrastructures mostly exist in supervised facilitiesthat could also become digital hubs, providing access, as well as support from peers, outreachworkers and volunteers.

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4 InfrastructureThe first part of the UK National electricity Grid was opened in 1930 — in central Scotland.By 1944 two thirds of homes in the UK had an electricity supply. Some rural areas of Scotlandremained unconnected until the 1960s.

Without intervention history will repeat itself. If we investwisely, then in less than 30 years, our children andgrandchildren will look back in wonder at a time whensome families survived without gigabit internet.

Availability of information transmission infrastructureswith a sufficiently high capacity is only one of the factorsthat will influence digital inclusion and the developmentof the information society. However, fixed and mobileconnectivity are necessary underpinning infrastructure.

Broadband subscriber connections are availablethroughout Scotland through a mixture of technologies.A minimum download speed of 512 Kbit/s ensures a basiclevel of service adequate for sending and receiving emailand for internet browsing. However, it is insufficient for efficient e-services, image transmission,or the uploading and downloading of music and video clips. In addition, some areas are servedonly by satellite connections with limited bandwidth and high latency. These cannot effectivelysupport interactive applications such as teleconferencing. Increasing upstream and downstreambandwidths with low latency are required.

4.1 The pace of changeJust as computer performance has increased exponentially for several decades, following Moore’slaw, so median domestic broadband speeds are expected to follow Neilsen’s Law, doubling every 20months — increasing 64-fold over the next decade. Novel applications will exploit this new capacity.

We are entering a new age of optical communication.19 This will bring new opportunities for real-timemultimedia interaction — and for distributed sending, storage, and analysis of data. These will beused to develop new forms of community, enable new efficiencies, and generate new markets thatcontribute to economic growth.

Regions with advanced information infrastructures — those “ahead of the curve” — will have newopportunities for both innovation and exploitation. We agree with the Caio report20 that,“Broadband/NGA will become a critical digital utility, essential to the competitiveness of anycountry and to the quality of life of its citizens.”

High speeds, symmetric connections and low latency are required for interactive multimedia,which will underpin new applications in healthcare and education. Roll-out of future advances incommunications technology to businesses and to the home will lead to further innovation anddisruptive changes in social and commercial services. We cannot predict how these technologieswill be used, but we can predict some changes in technology, and use these expectations to guideour strategy.

19Optical fiber has been used for communications for several decades. These technologies are now competitively priced for consumerapplications, including fiber to the home, bringing optical speeds to consumer markets.

20 http://www.berr.gov.uk/files/file47788.pdf

km Mb/s

VDSL2 < 0.5 < 100

3G < 1.5 < 10

DSL < 2 < 25

WiMAX < 20 < 100

Cable < 150 < 300

Fiber > 300 > 10,000,000

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Broadband speeds currently (2010) experienced in Scotland range from 0.3 Mb/s to ~50 Mb/s.21Already, we find 0.5 Mb/s is inadequate to support a family's use of many of today's applications, suchas streaming video and video chat. If we accept 2 Mb/s as a benchmark minimum recommendedspeed for connection to today's internet (many would set it higher than that), then we should require16 Mb/s in 2015 and 128 Mb/s in 2020, just to maintain our relative position. This will be ourrecommendation. However, new installations should normally aspire to be leading edge so theydo not quickly become obsolete.

The current spread represents a ten-year lag in digital access between the extremes of advantageand disadvantage. This long lag slows the pace of innovation, since new applications that rely onleading edge capabilities must wait ten years for universal provision to catch up. Our suggested targetwould close this gap in Scotland to about seven years — still longer than the approximately five-yearlag, from innovation to universal provision, that corresponds to Finland's target of universal access to100 Mb/s in 2015.

A compressed full-length movie may be represented by around 1 gigabyte of data. It would takeabout five hours to download at 0.5 Mb/s; at 10 Mb/s it would take about 15 minutes — providing youhad sustained access to that speed.

In fact, you are most unlikely to have sustained access to your nominal speed. Just as the watercompany expects no one to leave every tap in the house running fully open for every minute of everyday, so your broadband provider expects that no one will use the full bandwidth of their internetconnection for every second of every month. In fact, you share your nominal bandwidth with anumber of other subscribers.

The contention ratio of your connection is the number of subscribers who share your nominalbroadband pipe. Contention ratios of 50:1 are common — and of course each subscription typicallyserves multiple users within the household. If all 50 subscribers want to download a movie at thesame time, it will take each one 50 times as long: more than ten days at 0.5 Mb/s, and more than 12hours at 10 Mb/s. So, even with a 10 Mb/s connection, if you want to come home and watch a movie,it’s better to start the download before you leave for work.

At a contention ratio of 50:1 each 1 Mb/s of bandwidth, used flat out, day in, day out, will provide only6.5 GB of data to each subscriber per month. As ‘always-on’ usage increases, and the number ofusers and devices connected to each subscriber line increases, delivered speeds will have to go up,or contention ratios will have to go down, just to maintain current levels of user experience.

For a given level of subscriber demand, it is preferable to have higher speeds with correspondinglyhigher contention ratios. A speed of 100 Mb/s shared at 500:1, compared with a 10 Mb/s service at50:1, will give quicker responses at times when demand does not exceed supply, and equivalentperformance when there is maximal competition for bandwidth.

Internet architectureThe internet is an extensible network of networks. The component networks are autonomoussystems (AS) (these include a multitude of different organisations — ISPs, corporations, universities,government agencies, etc.). Any network that adheres to the internet protocol can connect to theglobal network by negotiating “backhaul” connections to one or more already connected networks.These backhaul connections determine the maximum bandwidth available from the local networkto the rest of the world.

21 http://broadbandforall.net/

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Network traffic is broken into many small packets, which travel independently, possibly by differentroutes. Different component networks use different technologies to transport these packets ofinformation — fiber, twisted pair, cable, WiFi, 3G and 4G mobile — and different parts of a singlelogical network may use different technologies. Routing information, network traffic, and sometimespayments, are passed between networks according to peering and transit contracts.

Peering is a symmetric agreement, for mutual benefit, where each network accepts incoming trafficfrom the other and forwards it for onward routing to its destination. Peering arrangements may onlycover traffic to destinations within one of the participating networks, and are often "settlement-free",which means that no payments are made.

Transit is an asymmetric agreement, where one client network pays the other to provide connectivityto the global internet. Some networks merely carry traffic from one network to another, facilitatingglobal connectivity; some are the internal networks of organisations and corporations; others exist toconnect individual subscribers to the global internet. Many combine several such functions and havemultiple peering and transit agreements, providing redundant connections to the global internet.

The economics of these agreements reflect a complex symbiosis. For example, an ISP typicallycharges end users for their connection to the global internet, but may also negotiate cost-freepeering arrangements to deliver that connection, because it provides other internet users withaccess to its customer base.

It is common to distinguish core, intermediate (middle-mile) and access (last-mile) networks.Middle-mile provision — access to backhaul — is a major issue in reducing the price of broadbandinternet provision by non-incumbent operators. Internet bandwidth is relatively inexpensive topurchase in bulk at the major Internet peering points. However, middle-mile access, wherebought from an incumbent operator, is often much more expensive. Building an intermediatefibre network is capital-intensive. For this reason, many proposals for government broadbandstimulus initiatives are directed at building out the middle-mile.

To ensure universal access to competitive digital infrastructure for the foreseeable future, we mustensure that Scotland has an integrated backbone network that brings high-speed backhaul withinreach of every home and business. Integrated, here, means that interconnected componentnetworks, administered by a variety of communications providers, which support each other throughpeering and transit arrangements, should deliver a single, robust, redundant, and extensible logicalnetwork, connecting Scotland to the global internet.

Openness has enabled the global development and growth of the internet. Openness enablesuniversal participation and contribution. To foster innovation, entrepreneurship and competition,Scotland should ensure an open market giving both established and new entrants access tothe backbone via equitable peering and transit arrangements, allowing them to offer end-userconnections to homes, businesses and communities.

4.2 TechnologiesTechnologies currently available allow us to plan new additions to the backbone network withsufficient capacity to accommodate foreseeable need over the next 30 years. The table on page15 gives rough estimates of the distance and bandwidth limitations for single hops of varioustechnologies for data transport. The details may be debated, and will vary with local conditions.Further improvements can be expected in electrical, radio and optical technologies. However,the glaring disparity between optical fiber and the rest is inescapable. It will remain.

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Fiber is a necessary technology required to underpin next generation access at national scale,and fibers laid now are expected to have a lifespan of over 30 years with zero maintenance,other than repair of accidental or malicious physical damage.

In order to upgrade the capacity of a fiber link, as new technology becomes available, only the twoendpoints have to be replaced, while the physical channel itself (the fiber) doesn't need to be changedor improved. From the technical perspective, it suffices to replace a modular transmitter on each end.For this reason, fiber represents a more future-proof asset than other media. Maintenance and repaircosts of fiber networks are much lower than those for copper networks of comparable size.

Optical cables can typically be installed in duct systems in spans of almost unlimited length. A singlefiber can already support 155 channels, each carrying 100 Gb/s over several hundred km. A 25 mmcable can include ~100 fibers. So a single cable could provide a 1 Gb/s channel for each inhabitant ofrural Scotland (pop.~1.5M). Regional disparities in digital access could be equalised for decades tocome, by a suitably planned core optical fiber network, owing to its practically unlimited transmissioncapacity.22

Where new physical data connections are laid, they should be based on optical fiber. Compared withcopper, carrying electrical signals, fiber has vastly superior performance, costs for installation aresimilar, and for maintenance fiber is cheaper. Excess dark fiber (fiber left dormant, that does not yetcarry optical signals), can be installed at low marginal cost, and later be lit, to meet new demand.

Wireless connectivity can be used effectively to provide high-speed communications over longdistances for limited populations.

Wireless signals can be used to transmit digital signals. However, bandwidth is limited, so the use ofwireless spectrum is regulated by Ofcom. Large parts of the spectrum are licensed for television andradio broadcasts and for mobile services. Others are “unlicensed”, but their use is regulated. In theUK for example, the power allotment for 2.4 GHz (used for WiFi and other services) is about one tenthof that allowed for products sold in the US. Increasing the allowable power levels for certain licenceexempt devices in less populated geographical areas could facilitate new services. In addition, partsof the spectrum licensed for broadcast and mobile coverage will remain unused in some parts of thecountry. Opening up this ‘whitespace’ could provide new opportunities for connectivity, particularlyin remote regions.

Greater flexibility could be exploited to enhance services such as delivery of higher speed broadbandto rural communities. There are many wireless devices operating on unlicensed spectrum thatprovide 300 Mb/s channels over distances of more than 50 km — up to 200 km at lower speeds.23The number of channels is limited by the spectrum available.

Copper A number of technologies use copper wires and cables to carry digital communications.These deliver limited bandwidth over limited distances. However, existing copper wiring can be usedto deliver limited broadband access without rewiring.

ADSL Asymmetric Digital Subscriber Line uses a twisted pair of wires (originally designed to carryanalogue telephone signals). Older ADSL standards can deliver 8 Mb/s to the customer over adistance of about 2 km. The latest (2009) standards can deliver up to 24 Mb/s over this distance.Distances greater than 2 km significantly reduce the data rate achievable.

22Optical Fiber Communications, Principles and Practice, John Senior ISBN: 9780130326812

23 http://www.motorola.com/staticfiles/Business/Products/Wireless%20Broadband%20Networks/Wireless%20Ethernet%20Bridges/PTP%20600%20Series/_Documents/Static_files/Fact_Sheet_PTP600.pdf

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In dense DSL deployments, where a large bundle of twisted pairs runs from a phone exchange,there can be significant “cross-talk” effects. Electromagnetic interference builds up as the numberof “active pairs” (cables carrying DSL frequencies) increases. So performance can degrade as newlocal users sign up.

Coaxial Cable (Co-ax) is designed for data transmission. It can deliver 300 Mb/s over a distanceof 150 km.

Power Line Transmission (PLT) and Broadband over Power Line (BPL) Cables used to provideelectrical power can also conduct high frequency signals that carry digital information. The highestinformation rate transmission demonstrated over power lines uses radio or microwave frequenciestransmitted over a single conductor, to achieve data rates in excess of 1 Gb/s. Medium-voltage powerlines have also been used to propagate multiple WiFi channels over a single conductor. It is not clearwhether these techniques could be used in Scotland.

Domestic mains power networks can be used to provide broadband internet connections, allowingthe premises served by a single circuit to share a 135 Mb/s connection to the backhaul, the bandwidthat each outlet being limited to ~2.7 Mb/s. Again, these techniques are unproven in the UK context.

SatelliteThe distance from northern Scotland to a geostationary satellite, positioned over theequator, is ~39,000 km. The speed-of-light round-trip to such a satellite takes ~260 ms, so theround-trip latency to your server is more than ½ second; where there is contention the delays areamplified, and all this is in addition to the normal internet latencies due to packet processing times.Recent tests have recorded total round-trip delays ranging from a minimum of 720 ms, up to 1200ms. Such delays make any highly interactive internet use impossible. Satellite broadband is alsoinherently asymmetric, and provides limited bandwidth. Satellite technology can provide basicservices such as email and access to static web pages, but it will not support applications thatexploit high speeds and low latency to provide an interactive experience.

4.3 ImplementationThe roll-out across Scotland of Next Generation internet Access24 (NGA—which provides highspeeds and low latencies beyond the capabilities of extended copper or satellite connections)will be particularly problematic, by reason of Scotland's particular physical and social geography.

The main cities have populations as follows: Glasgow 577,980, Edinburgh 446,110, Aberdeen 179,950,Dundee 141,930, Inverness 42,400, Stirling 33,060. Most of the 5.2m population is concentrated in thecities and the central belt.The rural population is about 1.5m. Population densities above 70 peopleper square kilometre (p/km2) (a figure which corresponds roughly to the Finnish criterion25 fora built-up area) are shown on pp 30 – 31. We also show areas with more than 7 p/km2, todemonstrate how population is distributed. There are isolated pockets in the West, and morecontigous areas along the East coast, in the borders, Dumfries and Galloway, and the Northern isles.Future growth is more likely in these areas than in the even more sparsely populated areas of thenorthwest. These maps highlight the difficulty of designing a fiber network that will come withinreach of all of every community.

24 http://www.youtube.com/watch?v=fgZZDCn6TZw

25 See the ‘Benchmarks’ section later in this report.

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We estimate that approximately 40,000 km of network is required to come within reach of everydwelling and business in Scotland — both the water and sewerage networks are roughly this big,and we take this figure as a working approximation for the size of the fiber network requiredfor similar coverage.26

However, the population distribution outside the major cities suggests that wireless will remain animportant technology for digital communications in Scotland. The Scottish census provides areas andpopulations for over 40,000 “output areas”, locally-defined areas with an average population of 120people (minimum 50). The graph below tells us that we can include 20% of the population within a setof output areas that covers just over 0.1% of Scotland’s land area; 1% of the land area includes almost80% of the population, and the last 20% of the population lives in the least populated 99% of the landarea. The last 5% of the population is particularly sparsely distributed, over 90% of the country.

%area Distribution of theScottishPopulation(log scale)

%population

There is already extensive fiber infrastructure reaching many parts of Scotland. This has grown inresponse to market opportunities. Without open collaboration, this organic growth has led topatchwork coverage. Some areas are served by multiple providers, with unused capacity, while othersremain beyond reach. The investment in, and use of this infrastructure is distorted by differences inrating regimes applied to different technologies and different operators.27 Strategic planning isobstructed by lack of transparency — there is no national map of our communications infrastructure.

CostsDetailed information on practical aspects of fiber provision are given in the EU FTTH Handbook.28The relative costs of laying fixed backbone, intermediate, and access networks are reported to be inratio 1:3:10, and 80% of these costs is accounted for the holes and poles required to lay or carry thecables.29 It therefore makes sense to reuse existing infrastructure, such as sewers30 or existingtransmission poles and pylons31, wherever possible, and to lay communications ducting, at minimalmarginal cost, in conjunction with civil works (as is already happening in Orkney), new build andrefurbishment.The per population costs clearly increase with increasing distances and decreasing populations,so small, distant communities are disadvantaged.Currently, every fiber used is valued for business rates, at least for new entrants to the market, on aper fiber km basis. Costs of hundreds of pounds per fiber km are reported, with ‘volume discounts’for multiple fibers on the same route. Again, this disadvantages small and remote communities, aswell as those wishing to install new fiber in competition with established providers.

26 The water and sewage networks have disconnected components, but interconnecting these would add only a small overhead.

27 http://www.computerweekly.com/Articles/2009/11/04/238417/How-the-government-taxes-UK39s-broadband-future.htm

28 http://www.ftthcouncil.eu/documents/studies/FTTH_Handbook.pdf

29 http://arstechnica.com/telecom/news/2010/03/fiber-its-not-all-created-equal.ars/

30 http://www.h2onetworksdarkfiber.com/latest-news.php?n=Dundee-to-become-the-first-Scottish-Fibercity

31 http://uk.reuters.com/article/idUKLNE62A00M20100311

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4.4 Conclusions

To ensure sustainable access to competitive speeds for each community we must ensure backhaulis accessible. Once affordable backhaul is within reach of every community, the rest will follow, from amixture of commercial and community provision. For long-term viability we should plan for demandto grow to gigabit/s speeds. Only fiber will meet this national backhaul requirement. Where newinstallation is required fiber is at least as cheap as copper.

Obstacles to the efficient use of fiber to provide a backbone network include both the rating regime,and a lack of the open access that is required to develop cooperative competition. Networks effectsmean that collaboration, which is essential to get optimal coverage across Scotland from the fiberinvestments of several competing providers, can provide mutual benefit. Openness is required toensure competition, both in the extension of the fiber network, and in local access provision wherewe expect local innovation and specialisation to introduce new technological and business modelsadapted to local geographies and economies.

The rating regime is also an obstacle to rollout of 3G and 4G mobile wireless services in remote areas,even where backhaul is available. Every mast is rated, and we understand that valuations are broadlysimilar across the UK. It would make sense to base the rating valuations of masts on the populationthey reach. Over 10% of the population of Scotland lives in population densities greater than 10,000people per km2, while the least accessible 15% live at densities of less than 1000 people per km2.It is no wonder that providers faced with uniform rating costs choose not to site masts in lowdensity areas.

We propose that every community including an output area with population density above 70 p/km2

should have access to fiber backhaul. We call this an accessible community, for ease of futurereference. Our proposal is to make them accessible! The areas with at least this population densityaccount for 92% of the population of Scotland, and 2.72% of the land area. Where communitypopulation is low (say < 1000) wireless technologies can be used, both for connection to remotebackhaul and for local access distribution. Where wireless cannot provide the minimum bandwidthrequired at low enough contention ratio, a fiber connection is required.

This 92% cutoff point occurs just at the kink in the graph of area against population. Along the wholecurve, it gets harder to connect people in successive areas as they are more dispersed. This kink isthe point at which it suddenly gets harder faster. Some of the remaining 8% will be within reach of thebackhaul installed to reach the accessible communities, but we have not quantified this effect.

Existing power restrictions on wireless transmission, which are justified in high-density areas, may beunhelpful in sparse rural settings. Extending the available spectrum would increase the bandwidthavailable (both through increased availability of white space and reuse of licensed spectrum in areaswhere licensee is not active). We anticipate that wireless point-to-point links carrying 500 Mb/s ormore could be built using multiple channels, given suitable spectrum allocation.

Where there is existing cabling, of course it should be used for local access, as long as it providesacceptable performance — but acceptance will erode as bandwidth requirements increase.

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5Content and accessPublic services can play a key role in fostering the take-up and use of digital technologies. Byexploiting digital technologies public services can be provided more effectively at lower cost.Encouraging wide-spread use of digital access to government also increases digital participation— with consequent benefits for all areas of society, including industry and commerce.

Public procurement of open source solutions can stimulate futher development and use, becauseopen source allows others to reuse and build on public investment. Similarly, open publicationof public data stimulates both effective use of this data to the benefit of the local economy andinnovation that can seed the development of new products and services.

Scotland has invested in the use of digital technologies to deliver and enhance a wide range of socialservices. But those without access are excluded from the benefits of these initiatives. Universal digitalinclusion will further increase the reach of social services, and hence social inclusion. It will alsoreduce costs, by making redundant some outdated systems which must currently be run inparallel to serve these populations.

Two examples, from health and education, were given earlier in this report, but we highlight heresome of the investments already made, the impacts of which will be extended by digital inclusion.

5.1 HealthThe Scottish Centre for Telehealth32, part of NHS 24, has already been helping individual NHS boardsdevise ways of using technology to reach out to patients in our more isolated areas and those withmobility issues. Work is now underway to establish nationally deliverable telehealth services.Their website provides numerous case studies of the use of telehealth to deliver specialist servicesefficiently to people in their own homes and communities. Demand, particularly in rural areas,threatens to exceed services available.

5.2 EducationInternet access provides new opportunities in education. Online content can be interactive and willinclude real-time interaction with remote peers, experts, and environments. Online content can beused to roll out innovations in curriculum and delivery immediately available to an entire populationof students.

Internet access enables distance learning, the benefits of which spill over to society as a whole.Distance learning expands educational opportunities, both in the classroom, by giving studentsaccess to expertise and experiences not offered at their local school and for those who maybe physically unable to attend.

Scotland has already invested in both access and content. Pathfinder33 is an initiative that hasdelivered high speed internet access to over 1,200 sites (including primary & secondary schools,council offices, libraries and harbours) across 7 of Scotland’s rural and remote Local Authorities(Scottish Borders, Dumfries & Galloway, Argyll & Bute, Highland, Moray, Orkney Islands and ShetlandIslands).34 We have looked most closely at the Pathfinder North project that covers the Highlands.This project was mainly funded by the Scottish Executive (now Government). The Pathfinder networkswere originally contracted to THUS plc which became part of Cable&Wireless Worldwide in 2008.

Glow35, is a Scottish national intranet for education. Glow will break geographical and socialbarriers and allow joined-up working the length and breadth of Scotland. This will transform theway education is delivered. It will work alongside Curriculum for Excellence to build capacityand ensure universal access to a first-class education for Scotland.

Students with suitable connections are able to access these materials and other learning resourcesover the internet, when not in school. Since many homes have no internet access and no computers,alternative access outwith school hours is required to ensure that no child is excluded.

32 http://www.sct.scot.nhs.uk/33 http://www.pathfindernorth.co.uk/benefits/how-fast/34 The backbone network built to deliver Pathfinder could enable wider deployment of Internet access.35 http://www.ltscotland.org.uk/glowscotland/about/Whatisglow.asp


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5.3 GovernmentAlready a wide range of government services can be accessed online, either providing informationon how to access public services, or increasingly to fully carry out all of the functions of a particularservice, for example Her Majesty’s Revenue and Customs accept self-assessment tax returns andpayments online. Information on services from advice on foreign travel to finding out how and whereto register a birth are all found through the Government website www.direct.gov.uk. Every localauthority in the country also provides information and opportunities to access services online.A further roll-out of government services online is planned for 2012.

Government can also stimulate development of the digital society by making public data “open”—i.e. freely available for use and, importantly, reuse. Providing open access to data not only reducescosts, by removing the need for registration and authentication of both internal and external users.It also stimulates innovation and entrepreneurship by providing opportunities for innovative“mash-ups” that bring data together in novel ways, for analysis, visualisation and exploitation.

Advocates of open access argue that government data is public data, collected and analysed at publicexpense. Where this data has social value, economic theory suggests it should be made available atmarginal cost in the digital world, this marginal cost is practically zero. In fact, making data openreduces the costs of managing authentication and access. The UK Government publishes much of itsdata through the website www.data.gov.uk, building on the work of the Open Knowledge Foundation.We believe that Scotland should establish its own open data portal to stimulate the reuse of publicdata resources for the analysis, management, exploitation and marketing of social assets.

5.4 BroadcastingMany of the aspects of broadcasting covered in the Digital Britain report are issues of UK nationalpolicy, where Scotland has no relevant devolved authority. However, one aspect of particularrelevance to Scotland is the increased move by broadcasters to make their content available online,to view at the time of convenience of the viewer. The success of the BBC iPlayer is a particularexample. This makes broadcast content available to those beyond the reach of existing transmissions,provided they have broadband access.

We expect this trend to continue and envisage a future where many viewers access all of theirtelevision and radio online. We therefore recommend that current public services obligations ofbroadcasters should be extended to include online dissemination of content over the internet.

5.5 AccessAcross Scotland there are varying gaps between availability and uptake of digital connectivity.Public internet access in supportive environments is required to allow those who remainunconnected by reason of choice or deprivation.

The provision of public open access WiFi can also stimulate the local economy by providing localsand visitors with access to location-based services. For example, Historic Scotland is the largestoperator of visitor attractions in Scotland, with 345 properties, ranging from neolithic standing stonesto historic castles. Of these, the vast majority are unstaffed, and many lie in relatively remote areas.WiFi at these sites could enable much richer location-based interpretation, while also providing aplatform for services directed at residents, tourists, or both.

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Pathfinder provides connectivity with speeds up to “300Mb per second, which is not shared withanyone else”. In fact the Pathfinder network includes unused capacity particularly outwith officehours, and surplus backhaul is available. Technically this could be used to contribute to the Scottishbackbone network, to provide high-speed internet for public access, and to provide backhaul formobile operators and community networks. A variety of different stakeholders would need tocollaborate to establish appropriate commercial and management arrangements.

Traditionally the Highlands and other remote and rural areas have been last to benefit frominfrastructure developments of many kinds, so it would be beneficial for the region to make best useof its communications infrastructure to deliver connectivity in advance of many other parts of the UK.

6BenchmarksWe have looked at the current provision and future strategies of a number of countries to see whatlessons Scotland could learn. These include Sweden, Finland and New Zealand, which are similar toScotland in terms of geography and population density, and the USA which plays a leading role in theworld economy and development of digital standards and technologies. We also draw attention to acouple of local initiatives that might inspire similar projects in Scotland.

6.1 SwedenThe Swedish Government released a broadband strategy in November 2009 which pledges that by2020 90% of all households and businesses should have access to broadband at a minimum speedof 100 Mbps in 2020, and 40% should already have access to broadband at that speed by 2015.The following points are taken from the executive summary:

The Swedish Government presents a Broadband Strategy for Sweden that clarifies the policyfocus: a broadband policy adapted to the situation and challenges we face. The Government iscontinuing its efforts to improve competition and conditions for market players through itsbroadband strategy.

The overall objective for Sweden is to have world-class broadband. A high usage of IT and theInternet is good for Sweden, in relation to growth, competitiveness and innovation. It contributesto the development of a sustainable society. It also helps in meeting challenges in the shapeof increased globalisation, climate change and an ageing population in a scarcely populatedcountry.

To meet the challenges it is essential to have access to high-speed broadband throughoutthe country. That implies that ninety per cent of all households and businesses should haveaccess to broadband at a minimum speed of 100 Mbps in 2020. Forty per cent should alreadyhave access to broadband at that speed by 2015.

It is important that Swedish businesses and households in all parts of the country are able tobenefit from the opportunities that access to powerful broadband gives. In order to changetraditional working methods, enable development of new services and business models andnew patterns of behaviour, all households and businesses should also have good opportunitiesto use electronic public services with broadband access.

As more and more services in society become digital, everyone must be given the opportunityto be connected. Everyday life should run smoothly: It is, in essence, a matter of democracyand rights.


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The underlying principle is that electronic communication services and broadband are providedby the market. The Government should not control the market or technical development. Our taskis to establish good market conditions and eliminate obstacles to development. This entailsensuring that there is a relevant regulation in place.

To meet the targets and provide the market with the necessary conditions to deliver services andto invest in broadband throughout the country, the Government proposes initiatives in severalareas. These include providing good conditions for competition, a revised model for spectrummanagement and promoting investments in broadband in more remote areas.

The municipalities planning responsibility is clarified by strengthening the focus on electroniccommunications in the Planning and Building Act.

The Swedish Post and Telecom Agency will be assigned to investigate how suitable frequencybands for electronic communications can be used for increased availability in areas that lackaccess to broadband or have broadband of low capacity and quality.

The level of functional access to Internet within the universal service obligation will also bereviewed.

Municipal initiative in Västerås 36

In 2000, Västerås was the first municipality in Sweden to form its own commercial company to buildand operate an open urban network, allowing the users themselves to decide which services theywant. The Västerås network today covers the entire town.

With its 22,000 household connections, Mälarenergi is already a large player on the urbannetwork market. It also has 1,700 companies, all the local state-run schools, council offices,companies and all of the Västmanland county council healthcare clinics.

Mälarenergi Stadsnät connects properties and service providers to the urban network.The users in companies, organisations and private households are, in turn, linked to theurban network via their landlord's property net.

Tenants' associations and housing associations can also build property nets and hook themselvesup. Once the property is connected, the companies, organisations and households are free to linkup. This usually takes place with the user paying a fixed monthly fee for the use of the networkvia the service provider(s) chosen.

The Västerås model is an organisational concept that helps provide structure and facilitates sales,contract-signing, start ups and contact with the service supplier. The model is based on a systemwhereby the network owner and the service providers share the revenue generated by the urbannetwork, with the service providers offering their services direct to the users instead of runningtheir own broadband connections to the customers they want.

The service providers pay for gaining access to customers who are already connected to thenetwork. The users hook up to the system via a normal wall data socket and then buy theservices they themselves want direct from the relevant providers. The Västerås urban networkoffers connections at speeds no less than 10 Mbit/s, but the network has a transfer capacityof between 100 and 1,000 Mbit/s.

36 http://www.packetfront.com/en/news_events/success/malarenergi.html

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6.2 Finland 37

The Finnish Ministry of Transport and Communications has enacted a law that will obligetelecommunications providers to offer at least 1 Mbit/s internet connections to all of the country’s5.3 million citizens by 2010 and 100 Mbit/s by 2015.

The Finnish Government reviewed its communications policy guidelines in December 2008.The guiding principle has been that telecommunications operators are responsible forsupplying communications services on market terms but if adequate communications servicescannot be provided on commercial terms only, public aid may also be used to ensure thatservices are available to all.

The implementation will be by subsidised projects which will be subject to competitive tendering.The telecom operator responsible for a project will pay at least one third of the project costs.The responsibility for the public aid – two thirds – will be divided between the state, municipalitiesand the EU.

Subsidies will only be paid to projects located in the most sparsely populated areas. A total of 66million Euros in State budget appropriations have been reserved for broadband subsidies. The EURural Development Programme will fund Finland’s broadband projects with 25 million Euros andthe municipalities involved with around 50 million Euros.

… a built-up area square (250 m x 250 m) is defined as a map square in which at least fourhouseholds or ca. 10 residents are located and the immediately adjoining map squares of which(750 m x 750 m) have at least 12 households or ca. 30 residents.

Finland has allocated additional frequency in the 1,800 MHz band enabling them to start building 4Gmobile networks. As a result, fast 4G networks can be provided with a substantially wider coverage ata lower cost than commonly used 2,600 MHz networks, which require a considerably larger numberof base stations.38

6.3 NewZealand 39

The New Zealand Government has released the details of a $1.5 billion ultra-fast broadbandinvestment initiative. The government will partner with the private sector to accelerate the roll-outof ultra-fast broadband services to 75 percent of New Zealanders within the next ten years.

The proposal will result in “Local Fiber Companies” providing and owning a dark fiber infrastructure,which is funded by government co-investment with the private sector.

The rationale is given in a series of questions and answers.

37 http://www.lvm.fi/c/document_library/get_file?folderId=121398&name=DLFE-4072.pdf

38 http://www.ranscope.com/finland-rural-mobile-broadband-coverage-needs-drive-spectrum-allocation

39 http://www.med.govt.nz/templates/MultipageDocumentTOC_41865.aspx


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Why is the government investing in broadband infrastructure?

Private sector companies have decided, on behalf of their shareholders and as a commercial decision,not to invest in a nationwide network of fiber-to-the-home at this point in time. The governmentunderstands this, and sowishes to assist andworkwith the private sector in improving the businesscase for ultra-fast broadband. The government is also getting involved in order to encourage theprovision of widespread open access dark fiber services, whichwill facilitate the best possiblecompetition outcomes in emergingmarkets and encourage innovation in wholesale and retail services.

What is the government’s objective for dark fiber infrastructure investment?

To accelerate the roll-out of ultra-fast broadband to 75 percent of New Zealanders over ten years,concentrating in the first six years on priority broadband users such as businesses, schools and healthservices, plus greenfield developments and certain tranches of residential areas.

Why is the government only investing in dark fiber?

Government investment at that level will facilitate the competitive commercial provision of ultra-fastbroadband services over fiber with theminimum regulatory intervention. In very simple terms, this isthemost “raw” access to the underlying infrastructure, and provides the best competition outcomesbecause thewholesale customer has full control and flexibility and has the ability to innovate indownstream services.

6.4 USA 40

The US Recovery Act 2009 makes reference to a radically different model of infrastructure provisioninto premises. It enables public investment in middle-mile to encourage private last mile provision,as well as public last-mile investment. The executive summary includes:

Broadband touches nearly every aspect of the U.S. economy, providing Americanswith unprecedentedopportunities in employment, education, health care, entrepreneurship, and civic participation. Formillions of Americanswithout adequate access to broadband, however, the possibility of falling behindin the knowledge-based economy is real.

By leveraging federal dollars, the Administration’s Recovery Act investments will expand broadbandaccess throughout the nation and providemore Americans – in both urban and rural areas –with theopportunity to succeed in the digital age. Among the awards are investments in “middle-mile”networks, which connect unserved or underserved communities to the Internet backbone.

These investments will maximize the impact of federal dollars by encouraging private service providersto build connections to homes and businesses using the publicly funded infrastructure. In rural areasand areaswith low population density that are difficult to reach, Recovery Act awardswill fundinvestments in the “lastmile” of service, whichwill help provide connections to homes and businessesthat would otherwise gowithout high-speed Internet access.

Recovery Act investments will also leverage federal dollars by targeting community institutions thatprovide critical services in urban and rural areas, including schools, libraries, and hospitals.Middle-mile projects will connect these institutions directly to broadband services, helping to improvethe quality of their services and exposing new users to broadband opportunities at work, school,and other venues.

40 http://www.whitehouse.gov/sites/default/files/20091217-recovery-act-investments-broadband.pdf

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Funding for public computer centers, including those in urban and suburban areas, will promote digitalliteracy among the new generation of workers through one-time investments in equipment, hardwareand software, and basic training.

These critical broadband investments will create tens of thousands of jobs and stimulate the economyin the near term. By providing broadband-enabled opportunities to previously underservedcommunities, these investments will also lay the foundation for long-term regional economicdevelopment and foster a digitally literate workforce that can compete in the new knowledge-basedeconomy.

6.5 Rutland Telecom 41

A recent report by the BBC highlighted how a community banding together and connecting throughOpenreach has managed to deliver high speed broadband of 40 Mb/s in Rutland. This UK communityraised £37,000 to provide 200 homes with the super-fast broadband that BT could not deliver.

Rutland Telecom offers the residents of Lyddington speeds of up to 40Mb/s. Established telecom firmshad said it was not economical to provide fast services to the village.

The Rutland Telecom schemewas a joint effort between villagers fed upwith slow broadband speedsand a local ICT firm that was reselling BT's broadband.

"We found that any company could do, on a smaller scale, what CarphoneWarehouse has doneand take over BT's network," said Dr David Lewis,managing director of Rutland Telecom.

They asked Openreach, the BT spin-off that has responsibility for the UK's telephone network,to supply fiber-optic cable to a street cabinet in the village. It was a slow process and required theintervention of regulator Ofcombut two years later the telco is up and running.

6.6 Tegola 42

Tegola is a project sponsored by the University of Edinburgh and the UHI Millenium Institute todevelop new technologies that can bring high-speed, affordable broadband to rural areas. It bypassesmuch of the existing wired access technology to provide wireless access to remote backhaul. An initialtestbed has been operating for about two years, delivering ~20 Mb/s shared between ~40 user sites.Users experience speeds of “up to” 20 Mb/s, at a contention ratio of 40:1. Downstream traffic is~ 50 GB per week.

6.7 CommentaryFrom Sweden, “providing good conditions for competition, a revisedmodel for spectrummanagement andpromoting investments in broadband inmore remote areas, and, “to investigate how suitable frequencybands for electronic communications can be used for increased availability in areas that lack access tobroadband or have broadband of low capacity and quality” are actions that transfer directly to theScottish context.

The Västerås model includes “property nets” set up by tenants’ associations and housing associations.We believe a similar model could apply to community nets in parts of Scotland unreached by thenational providers.

41 http://www.relay-rutlandtelecom.co.uk/

42 http://www.tegola.org.uk/


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The Finnish account highlights the need for intervention, and the applicability of the EU RuralDevelopment Programme to funding of “last-mile” connections. We note that its criterion for a“built-up” area, which corresponds to a population density of 70 people per square kilometre overa 750m x 750m square.

A recent comparison of the Finnish and Swedish interventions appears to show that interventionsaddressing supply or demand can both be effective.43

The New Zealand policies highlight the need to encourage the provision of widespread open accessdark fiber services, whichwill facilitate the best possible competition outcomes in emergingmarketsand encourage innovation in wholesale and retail services. In Scotland, the de-rating of fiber wouldbe a key contribution to such a policy.

Although the USA is of a vastly different scale, it includes a range of geography, both social andphysical, that makes some parts reasonably comparable with Scotland. Indeed, eight states ofthe USA have population densities comparable with that of the Scottish Highlands (< 40 per km2),and parts of the USA suffer deprivations that compare unfavourably with the least favoured partsof Scotland.

The US strategy highlights the unprecedented opportunities in employment, education, health care,entrepreneurship, and civic participation that digital inclusion will bring.

Our proposal, that intervention should start by ensuring that Scotland develops interconnectedfiber backbone networks to ensure availability of backhaul, corresponds to the Recovery Act focuson investments in “middlemile” networks. Like this report, it argues that investment in backboneconnections will have the effect of encouraging private service providers to build connections to homesand businesses.

On the demand side, it argues that connecting schools, libraries, and hospitalswill help to improvethe quality of their services and expose new users to broadband opportunities at work, school, andother venues.

Funding for public computer centers, including those in urban and suburban areas, will promote digitalliteracy among the new generation of workers through one-time investments in equipment, hardwareand software, and basic training.

The Rutland and Tegola projects give two examples of the kind of local innovation that could beopened up by enabling local networks to have reasonably-priced access to backhaul. The Rutlandexperience was that, despite supportive regulation, it took Ofcom intervention to establish backhaulaccess for their project. The Tegola project has not yet overcome similar obstacles. We hope thatthe outcome of the Ofcom review of Wholesale Local Access and Wholesale Broadband Access,due to report in autumn 2010, will create a more transparent market in this area.

Currently, the five European countries with the highest penetration are Lithuania, Sweden, Norway,Slovenia and Estonia.

43Does strategy matter? A comparison of broadband rollout policies in Finland and Sweden.

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purple 7 – 70 p/km2


red 1000-2000 p/km2

green > 2000 p/km2

31


Dumfries to Inverness



red 1000-2000 p/km2

green > 2000 p/km2

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7RecommendationsCurrent estimates are that purely market-driven broadband rollout in Scotland will leave over 35%of population behind in NGA rollout, without mitigating action. Geographically, most of Scotland iswithout 2G coverage and local loop unbundling; 3G coverage is even sparser. Broadband uptake inGlasgow stands at 39%.44

Meanwhile, there is unmet demand for broadband access from rural communities, and, in someplaces, unused capacity that could, technically, meet this demand. Existing providers are unwillingto extend networks to small, distant communities. New entrants are unable to purchase backhaul.

Regulation of the communications industry is a reserved power. However, some devolved powersof the Scottish Government can contribute to the development of the digital society in Scotland.Effective dialogue and co-operation between the Governments, and with providers, large and small,is required.

Ofcom will also be an essential partner in such discussions, because it has power to regulate areassuch as competitive access and spectrum. For example, current regulations on the use of unlicensedspectrum do not take account of the differing needs of sparsely and densely populated areas, andmuch of the licensed spectrum is unused, but unavailable, in parts of rural Scotland.

Potential policies for intervention include:

We suggest the following as initial proposals for discussion and refinement. The technical proposalsfor broadband delivery are merely a first outline that will certainly need to be revised in the lightof detailed local studies. In the end, this is a problem of engineering and economics.

44 http://www.ofcom.org.uk/research/cm/cmrnr09/scotland/cmrnrscot.pdf


Supply

> remove fiscal, regulatory andcompetitive barriers todeployment and use;

> include communicationsinfrastructure in public worksand new build through policyand planning;

> make spectrum available fornext generation wireless dataapplications, by extendingunlicensed spectrum, andopening up unexploited‘whitespace’;

> target direct funding for backhaulprovision and community accessin some high-cost areas;

> increase transparency throughdata collection and publication.

Demand

> foster tele-work, tele-medicine,e-government and e-learningthrough public procurement ofopen, standards-based systems;

> enable value creation throughopen data policies;

> support libraries to offer contentas online loans;

> ensure public access withincommunities;

> develop digital literacy for all;

> ensure online availability ofbroadcast content.

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The supply and uptake of new information and communications technology will be primarilymarket-driven. Business and residential customers will acquire their subscription connectionat their own expense from a provider of their choice. However, the provision of end-user connectionsdepends crucially on the availability of “backhaul” — a high-speed backbone network withinternational connections. The planning and development of this backbone network should be astrategic priority. The delivery of backhaul to the small scattered communities of the highlandsand islands will pose particular challenges, but it must be done.

Forward planning and cooperation among the various parties that maintain national networks(including transport, power, water, and drainage) could significantly reduce the investment required.It is estimated that excavation accounts for 80% of the cost of laying trunk fiber. Fiber ducting can beinstalled at almost negligible marginal cost in conjunction with other works. The cost to deploy opticalfiber ducts is less than €4 per metre if this duct is deployed together with other land work — this cancut the deployment cost by a factor of two to four times in rural areas and up to 10 times in densecities. The EU FTTH business guide provides further information on costs.45

Fibers can be, literally, blown through the ducts at a later stage without further excavation. Atransparent inventory of Scotland’s core digital infrastructure would enable such forward planning.

Planning regulations should also be used to ensure that installation of ducting suitable for fiberto the end-user is incorporated in all new residential and business developments, as well as civilworks. Regulation is also required to ensure wayleaves across potential “ransom strips” fortelecommunications ducting, as is done for other utilities such as water and power.

In some areas, the core physical infrastructure already exists. In many areas the sewer networkprovides ideal routes for fiber cables. Increased cooperation and transparency and competitive accessto the ducts and nodes of this infrastructure are required to enable the development of local accesssolutions. Opening up a wholesale market to allow competition and innovation in local access networkswill extend the reach of the internet in Scotland and generate increased demand and uptake.

It has already been demonstrated that access to high-bandwidth backhaul can stimulate localinnovation and community broadband initiatives in areas where provision of standard offerings is noteconomic. A backhaul infrastructure is also a necessary enabler for the provision of mobile wirelessservices in all areas.

When setting infrastructure requirements, particular attention must be paid to the evolution of ruraltele-communications. Both needs and benefits may be higher in rural areas due to long distancesand the remoteness of services. Internet access may be particularly useful in rural areas, for example,for the remote delivery of healthcare and education, and to provide online access to broadcastmaterial in areas not served by wireless transmission. Businesses in remote areas will make moreuse of multimedia teleconferencing, to access and interact with global markets and services.

Universal access could be achieved in Scotland by a combination of FTTC (fiber to the cabinet) inbuilt up areas, with sparser fiber provision supplemented by wireless distribution to all areas withpopulation density above 70 p/km2. For sparsely populated areas (say < 1000 inhabitants/km2)wireless distribution can provide efficient access from backhaul within 30 km or more. For moreconcentrated communities, fixed connections will be required, to backhaul within 2 km, unless fiberis used for backhaul.

All communities should provide open internet access in supportive environments such as librariesand community centres to ensure universal access. Access to the backhaul network should be opento provide transit or peering arrangements to competing providers of mobile (3G, 4G) and fixed-lineservices.

45 http://www.ftthcouncil.eu/documents/studies/FTTH-Business-Guide-v1.1.pdf

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Interim recommendations for aDigital Scotland strategy

7.1 Goals> Scotland should plan for a communications infrastructure that includes an integrated fiber

backbone accessible to all communities in Scotland.

> To maintain a competitive infrastructure Scotland should plan to deliver universal domesticaccess at a required bandwidth of 16 Mb/s by 2015, growing to 128 Mb/s by 2020, at contentionratios no greater than 20:1. These should be established as minimum requirements. Provisionin new installations and advanced urban areas is expected to be at least five years aheadof this curve (128 Mb/s in 2015; 1 Gb/s in 2020).

> To enable such services, fiber backhaul should be available within reach of every accessiblecommunity in Scotland. Generally, fiber connection should be available within 2 km to allowfixed connections. For communities of less than a thousand inhabitants, or so, wirelessconnections to backhaul may provide the required bandwidth.

> In every community there should be public access in a supportive environment availableand accessible to those without personal connection.

7.2 RecommendationsTo achieve these goals, relevant bodies in Scotland should:> remove fiscal and regulatory obstacles

• Fiber infrastructure opened to internet traffic from all providers should be derated.

• Work with Ofcom to ensure that regulation of licensed and unlicensed spectrum isadjusted to cater for optimal use in both rural and urban settings.

> enable competition and collaboration

• Work with Ofcom and providers to ensure that optimal use is made of existing backboneinfrastructure, linking existing providers and enabling new additions.

• Work with Ofcom to ensure that operators collaborate to deliver open access to backboneservices.

• Encourage and support innovation in local models for access networks in areas where UKnational providers fail to deliver.

> stimulate development

• Planning regulations should require the installation of ducting suitable for fiber as partof all public works and new build, with an appropriate regulatory framework to ensure openand competitive access.

• Public procurement of standards-based, open source systems should be used to enable localproviders to adapt and build on public investment.

• Local and national government should ensure open access to public data.

• Scotland should work with the UK Government to ensure that broadcasters make theircontent available online, so it is accessible to those not reached by wireless transmissions.


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> ensure universal access and digital inclusion

• Establish public access points in all communities suitable for all ages, with priorityfor provision in areas with least internet uptake, to enable universal access.46

• Build education and training into existing programmes to ensure that all children andadults can access the full range of opportunities that digital society offers.

• Target direct funding for backhaul provision and community access in some high-cost areas.

46None of the so-called UK online centres is in Scotland.

TheRoyal Society of Edinburgh22 – 26George Street, EdinburghUKEH22PQ

T +44 (0) 131 240 5000F +44 (0) 131 240 5024E [email protected]

Scottish Charity No SC000470

ISBN: 978 0 902198 31 9

©TheRoyal Society of Edinburgh 2010. Copying or reprinting of any part of this document is permitted for non-commercial purposes.

Census output is Crown copyright and is reproducedwith the permission of the Controller of HMSO and the Queen's Printer for Scotland.

Source for all population data in this document: 2001 Census; Key Statistics.

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